Grappling With Social Needs

Family funds urged to do more to influence public policies

Projected cuts in federal and state budgets over the next decade are reshaping the landscape for nonprofit organizations and point to the need for a reexamination of how the country’s social services are financed, grant makers were told here this month.

The annual family foundations conference of the Council on Foundations drew about 700 participants to discuss such issues as collaborative grant making, investment strategies, generational change, board effectiveness, and legal issues. But pervading many of the sessions was the sense that private donors were increasingly being asked to deal with a growing list of social needs in the face of cutbacks at all levels of government.

Sharon Daly, vice president for social policy at Catholic Charities USA, in Alexandria, Va., told conference participants that the social-service delivery system is under stress. “This is a system that’s already flawed and broken, that’s barely functioning because of cuts going back 10 years,” she said. The result: Organizations like hers have been reduced to emergency-service agencies, she said, diverting resources that might otherwise have been available to work on more systemic issues.

After detailing many areas in which government support has declined relative to the needs of the poor and vulnerable — including child care, health-insurance coverage, job training, and low-income housing — Ms. Daly acknowledged that philanthropy cannot make up the difference. But she encouraged grant makers to inventory their communities’ social needs and bring their findings to the attention of legislators.

“You have a responsibility,” she said, “to let public-policymakers know about all the unmet needs in your community for which you have no resources.”

Rick Cohen, president of the National Committee for Responsive Philanthropy, urged private foundations to support the advocacy groups and public-policy centers that monitor the effects government cutbacks are having on the neediest citizens and that represent their interests in policy debates.

“The most critical needs are at the state and local levels,” he said, “where almost no one is raising these issues.”

Advocacy Efforts

Foundations may face pressure to simply underwrite the cost of social programs in areas from which the government is retreating, Mr. Cohen said. But he and other speakers urged grant makers not to shrink from supporting advocacy groups seeking broader social change.

Robert Greenstein, president of the Center for Budget and Policy Priorities, in Washington, warned grant makers about a looming squeeze on virtually all federal spending. President Bush’s tax cut, he said, combined with the current economic recession and increased spending for defense and homeland security, would wipe out what was once projected to be a $5.6-trillion budget surplus by 2011 — just as the baby boom generation starts to draw down Social Security and Medicaid benefits.

The result, he predicted, would be “a gradual dismantling of significant federal functions — not today, not tomorrow, but over a several-decade period,” culminating in “a slow, but nevertheless quite radical, transformation of the role of the federal government.”

Mr. Greenstein endorsed the idea of freezing the Bush tax cuts at their current levels, which he said would result in a tax cut of $2-trillion over 10 years rather than the estimated $4-trillion if all provisions were to take effect.

“That’s still a pretty big tax cut,” he said, “but it would leave $2-trillion to once again think about reducing the ranks of the uninsured, reducing child poverty, providing a prescription-drug benefit for seniors, figuring out how we’re going to deal with global warming, paying down some more of the national debt, and dealing with a number of other challenges.”

Collaborative Projects

Such huge numbers can be daunting to family foundations, most of which have assets of less than $10-million. But even small funds have a vital role to play, some speakers declared. One way to magnify their impact is by joining a collaborative effort with other grant makers. The 30 members of the Sustainable Forestry Funders Collaborative, for example, last year contributed some $15-million in their effort to promote a switch from traditional “industrial forestry” to timber practices that are more environmentally benign.

Small funds can sometimes inject a quick $5,000 grant to try out an idea or get the ball rolling as larger foundations proceed with larger but slower grants, said Michael Northrop, a program officer at the Rockefeller Brothers Fund, in New York, which is involved in the forestry collaborative.

Nor is small size a barrier to international grant making, said Geraldine S. Kunstadter, chairman of the Albert Kunstadter Family Foundation, in New York, which has been making direct grants overseas since 1987, in addition to supporting U.S. organizations that operate abroad. With assets of $2.7-million and no paid staff, the foundation gives directly to projects in Cambodia, China, Laos, Thailand, and Vietnam, among other places. She and her husband, John, do the staff work, while their children also sit on the board.

Even relatively small grants can have a big impact overseas. For example, the Kunstadter Foundation gave $5,000 to a Laotian project that brings Hmong women into the city to train them as teachers, then sends them back to their rural villages to teach other Hmong, many of whom live in areas so isolated that regular Lao teachers don’t want to teach there. The grant covers the $150 annual stipends for each of 33 women.

Small foundations often take a hands-on approach to chores that larger organizations might delegate to others. When the Kunstadter Foundation made its first international direct grant of $2,500 to a project in China, for example, it sent the paperwork to its lawyer for review. A bill for $3,000 accompanied the lawyer’s approval letter. Since then, said Ms. Kunstadter, the foundation has handled the “equivalency determination” — attesting that the foreign grant recipient is functionally equivalent to a U.S. nonprofit group — itself.

New Publications

Several conference sessions touched on topics also dealt with in recent publications of the Council on Foundations, such as sparking an interest in philanthropy in the next generation, or working with family members who are geographically dispersed.

Susan Crites Price, for example, said that even young children can be encouraged to think about ways to help other people. As they grow older, they might serve on a junior board or be permitted to make some discretionary grants, or even serve as interns to see how their family’s foundation is managed. Those are among the ideas in Ms. Price’s book, The Giving Family: Raising Our Children to Help Others, published last year by the council. The cost is $19.95.

Other council publications showcased at the conference include:

The Guide to Small Foundation Management: From Groundwork to Grantmaking covers topics as varied as creating a mission statement, finding office space, filing records, recruiting staff, conducting site visits, and communicating with the public. The cost: $30 for council members, $60 for nonmembers.

The latest edition of First Steps in Starting a Foundation outlines the legal requirements for starting a foundation, describes different types of foundations, and includes sample legal documents and lists of resources. The cost: $25 for members, $45 for nonmembers.

Trends in Family Foundation Governance, Staffing and Management highlights how family foundations invest their assets, constitute and compensate their boards and staffs, and deal with potential problems like conflict of interest. The book is based on survey responses from 244 family foundations. The cost: $30 for members, $60 for nonmembers.

All the publications are available from the Council on Foundations, 1828 L Street, N.W., Washington, D.C. 20036; by phone at (888) 239-5221; or on the Web at http://www.cof.org.